Friday, November 26, 2010

I'm Dreaming of a Debt-Free Christmas...

As much as I love a great deal on something, I don't do the Black Friday sales. I just can't think of anything I want bad enough to get me to push through crowds, camp outside of stores, or lose hours of sleep. More power to you if you're braver and less lazy than me -- you've earned the savings.

In any case, I thought Black Friday would be an apropos time to mention budgeting for the holiday season. It is totally possible to stay afloat and on-budget during the busy Christmas season. Granted, it's not always easy and it does take some planning and extra work, but it can be done.

As an article on DaveRamsey.com says, "If you pay for your holiday festivities with credit, you're bringing a stalker home for Christmas. The holidays will follow you around all year long." For some people, the money they spend on the holiday festivities follow them for months in the form of bills and interest. Ever heard of Blue Monday? It's a Monday in mid- to late January that is deemed the most depressing day of the year. One of the reasons it's so depressing is because that's when the post-Christmas credit card statements start coming in. Sad, but true.

So, to help you avoid "bringing a stalker home for Christmas", here are a few ways you can stay out of debt and cut back this Christmas season...

Create a Christmas budget.
This seems obvious, but it can make or break you when it comes to staying out of debt this Christmas season. For the last couple years, before we start our Christmas shopping, my husband and I plan out our Christmas budget. It's nothing fancy or complicated. After we've paid our regular, monthly expenses, we figure out how much money we have left to spend on all things Christmas. We figure out a specific amount that we can spend on each other and a specific amount for our son. After that, we move on to the extended family -- our parents, siblings, and nieces/nephews. We also set aside a little extra money for other miscellaneous expenditures (gifts for friends and neighbors, decorations, activities, etc.). Having a budget is like having a game plan. It sounds simple (though it does take discipline), but it works. If you're intimidated at the thought of budgeting, there are sites like Mint.com that can help you track your expenses.

Use cash.
One of the main keys to sticking to our Christmas budget, I've found, is using cash. Not even the debit card, but actual cash. I've written about using cash and envelope system before, but I'll mention it briefly again: When you spend cash, it actually a little painful because you see and feel the connection. With a credit card, spending is abstract; with cash, it's anything but.

Once we've made our budget, we head to the ATM and withdraw the amounts we specified in our Christmas budget. A certain amount of cash for me to spend on my husband and a certain amount for him to spend on me and so on. We do this for everyone on our shopping list. And once the cash is gone, it's gone. Purposefully leave your credit card at home. If we do online purchases, we make sure to stay within our budget and transfer the money accordingly. Not only does this keep us on budget, but it also makes us do our research to get the best deals and most for our money. We've been using cash for the last few years and while it does take a little more discipline and work, the peace it brings later is totally worth it.

Make a list.
Check it twice {ha ha}. Knowing what you want to buy before you buy is really important. Impulse buys can wreak havoc on your budget and debt-free goals. My husband is awesome about giving me very specific lists of things he wants, making budgeting and shopping easier. Before you go shopping for anything, be specific. Once you know exactly what you want to buy for each person in your Christmas budget, you can find the best deals and choose accordingly. Which leads to the next tip...

Do your homework.
Once you have your budget set and your gift ideas in place, it's time to do some research. For each item you're going to buy, do a Google search. Doing a search will give you an idea of the cost and where you can get the best deal. Visit the websites for the stores you are planning to shop at and compare prices. There are also great deals when you skip the stores and shop online -- and it's easier to resist the temptation of impulse buying when you buy online.

Start early.
I feel like a hypocrite even mentioning this because I always seem to procrastinate all of my shopping until a week or two before Christmas. However, I have friends who get their shopping done months before Christmas. Spreading purchases over an extended period of time is a great way to avoid debt during the holiday season.

Go homemade.
You can save a lot of money making your own gifts and decorations during the holiday season. Plus, like I always say, giving something homemade means more because it takes time and extra thought. While some crafts and projects can be difficult and take a lot of skill, there are even more that don't require a lot of expertise. Over the next few weeks, I'm going to be posting a bunch of ideas, recipes, and links to help with your homemade holiday endeavors.

Alter your expectations and perspective.
It's too bad that our society places so much importance on the gift giving aspect of the season. Don't get me wrong -- I love getting and giving gifts. But I think it's sad how the most joyous time of year can become the most stressful too. So this Christmas season, don't be afraid to cut back on how much you spend, how much you give, how much you bake, and how much you decorate. I went to a presentation once where an organization expert suggested just cutting back 10%. She said that was enough to give yourself a break without changing too much.

In the end, the most important thing is to make the Christmas season memorable. Sure, people will love the gifts you give and they may remember some of them. That said, the season that is now upon us is more about enjoying the love of family and friends and celebrating the greatest of all gifts, the gift that came so many years ago in Bethlehem. When we remember those two things, family and faith, our priorities will fall into their proper place as we realize that "maybe Christmas doesn't come from a store" after all.

2 comments:

I've got to be honest. We have a budget for Christmas, but it's rather large :/ We don't buy anything for ourselves all year. Seriously! We're on a need base only through the year, so at Christmas time (which also is birthday time for both of us), we kind of go crazy. My parents do it too. I think Adam's parents also do. I'm not sure it's a "tradition/bad habit" I want my kids to carry on. We should probably just give ourselves the same budget to spend throughout the year rather than saving it for Christmas time. That would be a good solution. Any other ideas?

I don't think there's much wrong with a large budget for Christmas -- if you have the funds. I only mentioned cutting back because lots of people (including myself, up until a couple years ago) spend more than they can afford. Now if you want Christmas to be a little less about the gifts, then maybe you should spread out the budget throughout the year. It's a personal decision -- they key is that you only spend money that you actually have!